Govt may fix upper price band for CIL IPO at Rs 260

The government is likely to fix the upper price band for Coal India's mega IPO at around Rs 260 per share, a range which could help it raise over Rs 16,000 crore if the public offer is fully subscribed.

There are indications that the upper price band could be about Rs 260 a share, a person in the know of development told PTI. The final decision would be taken by the Empowered Group of Ministers (EGoM) on October 12, he added.

According to market sources, merchant bankers working on the issue are of the view that upper price band should be set at Rs 280 per share to garner the maximum from the initial public offering (IPO), billed as the biggest ever to hit the market. CIL officials, however, insisted on lower price to attract more retail investors.

The government is diluting its 10 per cent stake in Coal India Ltd (CIL) through a public offer. At present, the government owns a 100 per cent stake in the company.

Citigroup Global Markets India, Deutsche Equities (India) Private, DSP Merrill Lynch, Enam Securities, Kotak Mahindra Capital and Morgan Stanley are the book-running lead managers for four-day offer which would start on October 18.

When contacted, CIL Chairman P S Bhattacharya refused to comment on the price band. He merely said, "The decision will be take by ministers' group."

Meanwhile, CIL is in process of filing the prospectus (RHP) for the issue after its board on Saturday cleared the revised papers incorporating 78 changes suggested by market regulator Sebi.

As per the Draft Red Herring Prospectus (DRHP) filed by the company with SEBI, CIL will offer 631,636,440 shares with a face value of Rs 10 each.

The biggest IPO till date is that of Anil Dhirubhai Ambani Group company Reliance Power which in January, 2008, raised Rs 11,500 crore.